The Indiana Law Blog linked to an interesting article in the New York Times on the push to “re-regulate” the electric industry in some states where “deregulation” was attempted.

I remember the deregulation efforts fairly well because that was one of the areas to which I was assigned when I worked for the Legislative Services Agency. The electricity deregulation bills would usually cross my desk at some point or another. I was staff counsel for the Regulatory Flexibility Committee where the proposals would usually get banished for study over the summer. In Indiana, I believe the push for deregulation of the electric industry failed in large part due to sentiments I remember being expressed by Rep. Dave Crooks. He didn’t want to be the guy responsible for raising electricity prices for the folks back home. Indiana was, after all, already one of the lowest energy markets in the country — even if the lobbyist from Enron, along with others, was telling the General Assembly that deregulation of the energy market was the way to get even cheaper energy. I also recall Rep. Jim Bottorff playing a pretty active roll in bottling the deregulation proposals up in the House Commerce Committee. I may be wrong, but I seem to recall the folks from the Indiana Manufacturers Association were pretty keen on the idea of deregulation as well.

Apparently the states that didn’t have enough guys like Rep. Crooks and Rep. Bottorff are having a little buyer’s remorse.

More than a decade after the drive began to convert electricity from a regulated industry into a competitive one, many states are rolling back their initiatives or returning money to individuals and businesses.
. . .
Of the 25 states, and the District of Columbia, that had adopted competition, only one, California, is even talking about expanding market pricing.

The main reason behind the effort to return to a more regulated market is price. Recent Energy Department data shows that the cost of power in states that embraced competition has risen faster than in states that had retained traditional rate regulation.

One of the main problems seems to be that there wasn’t any real competition in the markets. The Federal Energy Regulatory Commission has a laughable approach to determining “market prices”:

The Federal Energy Regulatory Commission, however, has declared that once it determines that a market for electricity is in place, the prices that result are inherently market prices.

Marily Showalter, a former Washington State energy regulator has calculated from government data that the total real cost to consumers in states with “competition” was $292 billion in higher electricity prices since 2000.

There were good reasons for regulating energy companies in the first place. Apparently those reasons haven’t entirely disappeared over the past 70 years.

A bit of Labor Day news: American workers are the most productive in the world.

American workers stay longer in the office, at the factory or on the farm than their counterparts in Europe and most other rich nations, and they produce more per person over the year. They also get more done per hour than everyone but the Norwegians, according to a U.N. report released Monday, which said the United States “leads the world in labor productivity.”

The average U.S. worker produces $63,885 of wealth per year, more than their counterparts in all other countries, the International Labor Organization said in its report. Ireland comes in second at $55,986, followed by Luxembourg at $55,641, Belgium at $55,235 and France at $54,609.
. . .
The U.S., according to the report, also beats all 27 nations in the European Union, Japan and Switzerland in the amount of wealth created per hour of work — a second key measure of productivity.

. . .

Whereas a Chinese industrial worker produces $12,642 worth of output — almost eight times more than in 1980 — a laborer in the farm and fisheries sector contributes a paltry $910 to gross domestic product.

The difference is much less pronounced in the United States, where a manufacturing employee produced an unprecedented $104,606 of value in 2005. An American farm laborer, meanwhile, created $52,585 worth of output, down 10 percent from seven years ago, when U.S. agricultural productivity peaked.

Consequently, American laborers have seen steady increases in wages and leisure time. O.k., just joking about that. But, still. &$%*& Norwegians!

With these facts in mind, I’d now like to direct you to an opinion column featured in today’s Lafayette Journal & Courier entitled “Today’s employees need to develop a better work ethic.”

And the general attitude that many workers have is: “What is the least I can do and the most I can get paid for it?”

Nobody wants responsibility.

Many young people don’t want to start at entry-level positions.

They want to name all the conditions for their job and they want to start out making the decisions and being their own boss.

Employers aren’t that concerned about the applicant’s level of education anymore. They are more interested in past work experience; lost workdays, tardiness record and an employee’s history of work quality.

It’s difficult to find people with good work ethics.

Damn kids. Leading the world in productivity. Why, in my day . . .

Meanwhile, John Edwards, speaking in Des Moines, Iowa suggested that the future of America’s middle class is tied to the future of the labor union:

“The truth of the matter is that in order to grow and strengthen the middle class in this country, we have to grow and strengthen the organized labor movement,” Edwards told the South Central Iowa Federation of Labor’s “Solidarity Fest.” . . . “I want to be the candidate who talks about the economic disparity that still exists in America and then I want to be the president that does something about that economic disparity and builds one America where everybody has a real chance,” Edwards said.

So, what about it? The decline of the labor union certainly has taken place during a period of time where the middle class has, if not declined, at least slowed its advance. As I’ve discussed before, wages have been stagnant over the past 30 or 40 years even while productivity has increased substantially. I can’t say whether the lot of a middle class family is any more tenuous than it was in 1967; but I’m pretty sure the lot of the middle class family at least feels more tenuous. Jobs seem less secure, retirements uncertain, catastrophic health bills could be just around the corner, etc. etc. etc. Part of this might be the same fear media porn that makes us fear a pedophile or murderer on every block, even while crime is decreasing. But, I suspect the financial security of the middle class actually is more tenuous, though perhaps not as much as the hype would suggest.

Are labor unions the answer? I have no idea.

SchansBlog brings us the C.S. Lewis quote-of-the-week:

We all want progress. But progress means getting nearer to the place where you want to be. And if you have taken a wrong turning, then to go forward does not get you any nearer. If you are on the wrong road, progress means doing an about-turn and walking back to the right road; and in that case, the man who turns back soonest is the most progressive man.

In other words, The First Rule of Holes: if you’re in one, stop digging.

Taking Down Words has a post that flags an article by Karen Eschbacher in the Indy Star. The two discuss tax abatements and TIF districts and juxtapose them against 501(c)(3) exemptions. The tension between the types of exemptions had not really occurred to me before.

During the latest property tax brouhaha, there has been a fair amount of railing against tax exemptions for businesses and mechanisms such as TIF districts. Generally speaking, tax exemptions or abatements are mechanisms by which taxes on businesses are eliminated or lowered as a means to lure the business to the area or as an incentive for expansion of a business. TIF districts are mechanisms by which the businesses are still taxed, but the taxes are used for projects in the district — for example a business wants to move into an area, a locality creates a TIF district and takes bonds out to improve infrastructure in the district, and tax revenue from the TIF district businesses are used to pay off the bonds. Consequently, tax revenue from the businesses in the TIF district do not serve to lower the tax burden for other citizens in the locality. 501(c)(3) organizations are tax exempt non-profits. Churches are one of the most common of these organizations.

Apparently the folks grousing about business exemptions, Eric Miller as a primary example, are not grousing about 501(c)(3) exemptions. So, which type of exemption benefits a community most? Obviously there is not going to be any hard and fast rules. Some churches bring more to a community than some businesses; and vice versa. But, according to the Star report, the business exemptions “don’t take as many tax dollars off the books as tax exemptions given to churches and other nonprofits.” So, at the least, the non-profit exemption is more expensive for the community than the business exemption.

[tags]property tax, religion[/tags]

(H/t Muncie Free Press) The Indiana Department of Workforce Development has highlights of various county data.

Each county highlight includes population, education, commuting, labor force, industry, income and firm size data, available by clicking on any county on the map.

All right, on to important matters: pizza. A previous discussion led to the subject, so I thought I’d elevate it to it’s own topic. Indiana is, what, the 9th fattest state? So, I assume many Hoosiers have strong opinions about their pies.

For my part, I favor the thin, crispy crust variety. I grew up in Richmond, and my favorite there was Pizza King. They have the thin crusts, cut into party squares and grind up the sausage and pepperoni. They also have a pretty outstanding Royal Feast. It is my understanding that the Pizza King franchises are divided among those in the eastern part of the state — notably Muncie and Richmond; and those in the rest of the State. Just looking online, it seems that those in East Central Indiana have some centralized affiliation. In the rest of the state, it seems more haphazard. In my experience, the east-central Pizza Kings are excellent, the rest are just so-so.

While I’ve been in Lafayette and Monticello, I have fallen in love with two franchises: Arni’s and Monical’s. Between the two, I prefer Monical’s crusts but prefer Arni’s ingredients. Both are, again, of the thin crust variety.

While I was in Bloomington, as a student, I especially liked Pizza Express. Their pizza was pretty much just adequate, but I loved their breadsticks with their garlic butter. Those things were a tremendous way to cap off a night of drinking.

I never really found a favorite pizza place while I lived in Indianapolis; and mostly made due with more national varieties of pizza, primarily Papa John’s I suppose.

Any other recommendations out there?

Greater Lafayette Ranks #2 for jobs available – or, at least so says a CareerBuilder.com report cited by Max Showalter for the Lafayette Journal and Courier.

Based on jobs per 100,000 residents, the survey shows only Jackson, Tenn., was identified as having more job openings than Greater Lafayette.

So why is my collection business doing fairly well? I guess the trick is to keep them employed, but not so employed that they can pay all of their bills. And, who knows what sort of jobs CareerBuilder.com is focused on. It may be that the lower tiers of laborers aren’t counted very well. Thanks to Purdue and some local initiatives, the Lafayette area has some pretty unique opportunities for well-educated job hunters; particularly given the size of the population.

Ron Shawgo, writing for the Fort Wayne Journal Gazette, has an article entitled Household income off 10% in state.

Unable to keep up with inflation, Indiana’s median household income has slipped an estimated 10 percent since 2000, with only three other states posting worse declines.
. . .
Indiana’s median household income was an estimated $45,394 last year, lower than the $50,298 earned in 1999, when adjusted for inflation. Only Michigan, Ohio and North Carolina had greater percentage declines. Only eight states showed incomes that outpaced inflation.

How is this happening when American productivity is up (or so I’ve been told?) Is it just that fewer people are pocketing more of the value produced? Or is something else going on? I’m no economist, so this is a real question.

Update
ManFromMiddletown has a diary entry over at Blue Indiana noting some pretty startling information. Indiana apparently has 3 of the 10 poorest communities: Bloomington, Gary, and Muncie. I wonder if student populations figure into the calculations somehow. (I don’t really feel the same concern for a college student living in a hole, eating Ramen as I do a high school dropout trying to raise children living in the same squalor.)

Update #2 Plate o’ shrimp — as I was writing update #1, I noticed that ManFromMiddletown had graced this fair blog with a comment. He points out a report from the Economic Mobility Project (pdf) (put together by folks working for the Brookings Institution and the Pew Charitable Trusts). Page 6 of the report, reveals that for the first 30 years following World War II, productivity increases and median household income growth went up pretty much in lockstep. Since the late 70s, and most dramatically since 2000, productivity has continued gone up much faster than median household income. “[T]he benefits of productivity growth have not been broadly shared in recent years.”

The report itself focuses mainly on intergenerational mobility — the extent to which children move up or down the income spectrum relative to their parents’ generation. (Seems like the “nothing is wrong” crowd will often try to show mobility by pointing out that an individual can expect to increase his or her earnings as he or she gets older.) The report notes the importance of intergenerational mobility to the American Dream. By and large, Americans like to view our society as one where diligence and skill get rewarded. Large differentials in economic outcome are acceptable because, after all, your fate is in your own hands. If you get rich, it’s because you deserve it. If you stay (or get) poor, it’s your own fault. The report suggests three hypothetical types of society – 1) The meritocratic society where you rise or fall according to how hard you work and how talented you are; 2) The “fortune cookie” society where it’s all luck; and 3) The class-stratified society – you’re born into it.

Obviously, we’ve always had a little of all of these going on. But, for the past generation or so, it looks like we’re starting to favor #2 and #3 more than in the past. And, in fact, the study finds that Denmark, Norway, Finland, Canada, Sweden, Germany, and France have more relative mobility than does the United States. In other words, your parents’ status is a better predictor of what your status will be when you grow up than it is in those other countries. In our peer group, only the United Kingdom has similar levels of mobility. Viva la revolucion!

Lots of other sobering information in the report. Thanks ManFromMiddletown.

There is plenty to be concerned about with Indiana’s current property tax system — but here’s one that comes pretty far down on the list to me: The General Assembly’s tax preference for owner-occupied properties. Lesley Stedman Weidenbener, writing for the Louisville Courier Journal, has an article entitled Indiana landlords to make plea for tax relief.

In addition to the concerns pretty much everybody else has about property taxes, the landlords add a complaint for the preferences given for owner-occupied properties. The General Assembly provides a homestead credit for properties occupied by their owners, resulting in a lower tax obligation for such properties. This, the landlords say, is unfair. In particular, I like the analogy offered by Morton Marcus, director emeritus of the Kelly School of Business:

My concern is that property should all be taxed on the same basis,” Marcus said. “We don’t say when you buy a box of cereal: ‘Do you have false teeth? And if you do, we will charge you a different sales tax.’ “

I’d say it’s more like giving a tax break to people who are going to eat the cereal than those who are going to use the cereal as, say, an art supply. Both are perfectly legitimate uses of the product, but the General Assembly might reasonably provide a preference for the more basic necessity.

I recognize there is a debate to be had as to whether tax policy ought to be a tool for social engineering. For example, you might argue that the General Assembly contributed to the subprime mortgage debacle by encouraging everybody to own a home. That example’s a little tenuous, I suppose, but the debate is legitimate. However, if one accepts the legitimacy of using taxation to advance policy preferences, I think a preference for owning one’s own residence is generally sound. In my own neighborhood, the owner-occupied properties seem to be better maintained than the rentals. I’m generally happier when my neighbors are owners rather than renters because, generally, there is going to be more pride in ownership.

At the end of the day, the landlords’ pleas for “fairness” seem to be nothing more (and nothing less) than a complaint that they have to pay more on their capital investment than folks with like property who choose to live in their investment.

Scott at Hoosier Pundit posted a cartoon about Iran taking provocative action with respect to Iraq. The cartoon reminded me of a Daily Show bit I saw a couple of days ago reminding us that we built up Iraq because we were opposed to Iran; we assisted bin Laden because he was fighting against the Soviets in Afghanistan; we are providing military aid to the Saudis (“20% of the 9/11 suicide attackers were not Saudis”) because they are upset at the increase in Iranian/Shiite power resulting from our invasion of Iraq; and, just for good measure, we’re providing Israel with additional military aid because they’re nervous about all that Muslim military power.

There are plenty of other factors contributing to making that region of the world a pit, but I don’t think we’ve been doing ourselves any favors.